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Issues involved: Rejection of plaint under Order VII Rule 11 CPC based on Section 111 of the Companies Act, 1956.
Summary: 1. The plaintiff/appellant filed a suit seeking a declaration that certain shares were transferred through a forged document and requested an injunction against further transfers by the company. The defendant/respondent argued that the jurisdiction of the civil court was barred under Section 111 of the Companies Act, 1956. 2. The Court noted that Section 155 of the Companies Act, 1956 was substituted with Section 111, both having similar tenor. The trial court observed that Section 111 is intended for non-controversial matters and quick decisions, not for disputes requiring detailed investigation. It can decline to entertain petitions involving serious disputes, directing parties to civil court. 3. The trial court initially relied on a Supreme Court judgment but later referenced an order from the Company Law Board, directing the release of bonus shares. It suggested the appellant pursue remedies under Section 111 if fraud was suspected, leading to a contradictory stance. 4. The Court emphasized that the remedy under Section 111 is summary in nature and may not suffice for cases requiring detailed evidence like handwriting analysis. The disputed title of shares cannot be resolved summarily under Section 111. 5. Section 111 grants the company power to refuse registration, with appeal options. Without a civil court declaration on the forged document, the appellant cannot seek registration of disputed shares. The appellant's right to maintain the civil suit was upheld, dismissing the respondent's reliance on a previous case. 6. The appeal was allowed, setting aside the impugned order and restoring the appellant's suit. Both parties were directed to appear before the trial court for further proceedings. The appeal was disposed of with each party bearing their own costs.
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